UK restructuring and insolvency in a changing legal landscape

The economic landscape in the UK remains challenging. High interest rates, sustained cost pressures and subdued business confidence continue to test corporate resilience. Over the past year, these difficult trading conditions have been reflected in restructuring and insolvency activity, with prominent cases such as Thames Water, River Island and Pizza Hut highlighting market strain. 

For UK businesses and their advisers, 2026 is already showing further signs of uncertainty. Persistent cost inflation, cautious lending and ongoing geopolitical tensions suggest that insolvency activity will broadly mirror 2025 levels. Many businesses are recognising that these challenges form part of the longer-term economic environment, influencing operational decisions and approaches to risk management. Practitioners must remain alert to legal and procedural developments throughout the year, enabling clients to respond effectively to both challenges and opportunities. 

Enforcement of unrecognised foreign judgments

In June 2026, the Supreme Court is set to hear Servis-Terminal LLC v Drelle after permission to appeal was granted in October 2025. The case stems from the Court of Appeal’s decision in January 2025 which overturned the High Court’s ruling on whether a bankruptcy petition can proceed based on an unrecognised foreign judgment. 

The case concerns a Russian company in liquidation, Servis-Terminal LLC, which obtained a judgment from a Russian court against Mr Drelle for 2 billion roubles (approximately £19m). Seeking to enforce the judgment in England, where Mr Drelle was resident, the company served a statutory demand and subsequently presented a bankruptcy petition.

At first-instance, ICC Judge Barton held that there was no genuine and substantial dispute as to the debt and made a bankruptcy order (Servis-Terminal LLC v Drelle [2023] EWHC 506 (Ch)), a decision later upheld by Richards J ([2024] EWHC 521 (Ch)).

However, on appeal, the Court of Appeal dismissed the petition, confirming that a foreign judgment must first be recognised by the English courts before it can support a bankruptcy petition (Servis-Terminal LLC v Drelle [2025] EWCA Civ 62).

The Supreme Court’s forthcoming decision is expected to provide clarity on the enforcement of foreign judgments in English insolvency proceedings, with practical implications for both creditors and debtors.   

Members’ Voluntary Liquidation

An appeal is expected in Noal SCSp & Ors v Novalpina Capital LLP & Ors [2025] EWHC 1392 (Ch), which considered the scope of the ‘12-month rule’ in an MVL. Novalpina was placed into MVL in May 2023 with a surplus of around £148,000. However, in October 2023, Noal commenced proceedings in Luxembourg against Novalpina for damages exceeding £247 million. The liquidator assessed the claim as worthless, but Noal applied to replace the liquidator and sought a direction that the MVL be converted into a CVL under sections 95 and 96 of the Insolvency Act 1986. 

In a first-instance decision, ICC Judge Agnello KC held that section 89 of the Insolvency Act 1986 imposes a strict requirement that a company in MVL must be able to pay all of its debts (including interest) within a 12-month period. When it becomes clear that full payment within 12 months is not achievable, conversion to CVL is mandatory. The outcome of any appeal will be followed closely. 

Restructuring plans and schemes of arrangement 

Since 1 January 2026, a revised practice statement has applied to restructuring plans and schemes of arrangement where applications for meetings orders are considered at convening hearings listed on or after that date. 

The revisions respond to growing procedural complexity and increased litigation in this area, as illustrated by a series of recent decisions that have placed significant pressure on court resources, including Re Waldorf Production UK Plc [2025] EWHC 2181 (Ch), Re Petrofac Limited and Petrofac International (UAE) LLC [2025] EWCA Civ 821, and Strategic Value Capital Solutions Master Fund LP v AGPS BondCo Plc [2024] EWCA Civ 24.

The updated framework signals a shift towards earlier preparation and more active case management. Applicants must now file a claim form accompanied by a ‘listing note’ setting out a proposed timetable for proceedings, time estimates for convening and sanction hearings, and any matters likely to affect case progression. These reforms are supported by enhanced judicial oversight and improved evidence standards. 

In practice, restructuring plan timetables will need to allow more time, requiring debtors to engage with advisers, creditors and other stakeholders at an earlier stage. For mid-market businesses, the streamlined processes could make restructuring plans and schemes of arrangement more accessible where consensual solutions have failed. The effectiveness of the reforms will become clearer as the year progresses. 

UNCITRAL model laws on insolvency 

Following its consultation in 2022, the UK government confirmed in July 2023 its intention to adopt: (i) the Model Law on the Recognition and Enforcement of Insolvency-Related Judgments (MLIJ); and (ii) the Model Law on Enterprise Group Insolvency (MLEG). The MLIJ is designed to facilitate the cross-border recognition and enforcement of judgments obtained in insolvency proceedings, while the MLEG aims to improve coordination of insolvency proceedings for enterprise groups by enhancing cooperation between courts, insolvency representatives and group members. 

Although progress on implementation appears limited, the Insolvency Service’s 2025 Annual Report confirmed its intention to proceed with both laws, with MLIJ subject to further consultation. Whether 2026 sees renewed momentum in this area remains uncertain, but any future developments could mark a significant shift in the UK’s approach to cross-border insolvency and judgment recognition.

Property (Digital Assets etc) Act 2025

On 2 December 2025, the Property (Digital Assets etc) Act 2025 entered into force, placing the legal status of digital assets (such as cryptocurrencies and NFTs) on a statutory footing. 

This short but important Act confirms that digital assets can be treated as property under English law, providing insolvency practitioners with clearer authority to trace and recover these assets and manage the unique challenges they present. 

Throughout 2026, the courts are expected to provide further guidance on the practical application of the Act, which from an insolvency perspective is likely to assist insolvency practitioners in handling estates involving digital assets more effectively. 

Conclusion

The UK restructuring and insolvency market remains complex and dynamic, shaped by evolving legal frameworks, procedural reforms and emerging asset classes. Key developments across restructuring plans, cross-border enforcement, MVLs and digital assets are likely to influence how businesses and practitioners approach strategy, risk management and value preservation. Those who respond proactively and adapt to these reforms will be best placed to manage challenges and seize opportunities throughout the year. 

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